FOREX-Dollar in doldrums as vaccines fan recovery bets

* Sterling near three-year high on vaccine progress
* Yuan slips after FT reports on rare earth export curbs
* Yen languishes as investors seek riskier bets
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, Feb 16 (Reuters) - The dollar fell to a
three-week low on Tuesday, sterling hit an almost three-year
high and commodity currencies rose as vaccination progress added
to investors' recovery hopes.
The buoyant mood, and a sell-off in U.S. Treasuries, also
dragged on the safe-haven Japanese yen JPY=EBS , which fell
through its 200-day moving average against the dollar and struck
multi-year lows against the euro, Aussie and Swiss franc.
The yen last traded 0.2% lower at 105.53 per dollar. The
dollar index =USD , which measures the greenback against a
basket of majors, fell 0.1% to 90.240, its lowest since Jan. 27
and the euro EUR=EBS hit its highest since that date.
The dollar traded near milestone lows against other
currencies. The risk-sensitive Australian dollar AUD=D3 hit a
one-month high of $0.7802 and the kiwi NZD=D3 made a five-week
peak of $0.7257. AUD/
"It's a risk-on, weaker-dollar mood taking over," said Bank
of Singapore currency analyst Moh Siong Sim, as investors focus
on a global bounce back in growth, inflation and spending.
He said investors were weighing up whether the recovery
would be U.S.-led, which could support the dollar, or much
broader, and thus negative for the greenback as global trade
picks up.
"Things right now reflect greater comfort with the story of
a synchronised global recovery, which is why we are seeing a
weaker dollar," he said.
Sterling GBP= , which has led the charge, extended gains to
hit $1.3946, its highest level since April 2018 as Britain leads
the world in per-capita vaccination speed. The currency has
gained almost 3% from early-February lows. GBP/
The euro EUR=EBS crept 0.2% higher to $1.2150 to re-test
recent resistance at that level. Rising oil prices lifted the
Canadian dollar CAD=D3 and Norwegian crown NOK= to
multi-week highs. O/R
Soaring bitcoin BTC=BTSP made a fresh record high of
$49,938, but seems rangebound just below $50,000, as
profit-taking pauses a steep rally that has driven the
cryptocurrency more than 60% higher this year.
The Chinese yuan CNH= slipped 0.1% to 6.4132 per dollar
after the Financial Times reported Beijing is exploring curbs on
rare earth mineral exports in order to hurt the U.S. firms that
use them. AND YEN
Besides the dollar, the Japanese yen has been the other
casualty of the broad rally in financial markets, hitting a
one-week low on Tuesday.
Recent equity gains - global stocks have climbed for a dozen
days straight - have been matched by growing expectations for
higher inflation, especially as central banks promise to keep
rates low for a long time. MKTS/GLOB
Those expectations were further boosted by a jump in oil
prices this week, as a cold snap shuts Texan wells, and have
driven U.S. Treasury yields to their highest since March. US/
That can affect the yen because Japanese investors are
acutely sensitive to any rise in nominal U.S. yields, especially
as they extend above anchored Japanese returns. JP/
Benchmark 10-year U.S. yields US10YT=RR are now 33 basis
points higher for the year so far and the yen about 2% lower.
The yen also hit its lowest since late 2018 against the euro
EURJPY= and the Australian dollar AUDJPY= and hit a
five-year low of 118.80 yen per Swiss franc CHFJPY= .
"The yen has been the worst performing currency of 2021,
with its negative correlation to U.S. Treasury yields proving to
be the biggest dampening factor," said Francesco Pesole,
currency strategist at Dutch bank ING in a note to clients.
"When adding weak safe-haven demand as the global recovery
gathers pace, some additional trimming of yen net long positions
may be on the cards."
Ahead on Tuesday, investors are looking to euro zone growth
estimates, a German sentiment survey and U.S. manufacturing data
to gauge the relative pace of the world's pandemic recovery.

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